<\/p>\n
In a spicy take on Lido\u2019s liquid staking dominance, David Rodriguez says Ethereum thought leaders aren\u2019t being realistic about the problem and are in fact, \u201ccoping.\u201d<\/p>\n
The Blockworks Research<\/a> analyst doesn\u2019t hold back in his critique of some of the community\u2019s suggestions to address the situation.\u00a0<\/p>\n Rodriguez explains that some leaders are suggesting Lido<\/a> should take one for the team, voluntarily limiting itself to 22% staking dominance \u2014 well below its current position at around 32% of the market.\u00a0<\/p>\n Competing liquid staking providers are valiantly promising that they would, of course, do the same, Rodriguez says, if only they could first grow more than ten times in size to even face the same dilemma.<\/p>\n On the 0xResearch podcast (Spotify<\/a>\/Apple<\/a>), Rodriguez argues that the suggested tactics to limit Lido\u2019s dominance are \u201cshort-sighted.\u201d\u00a0<\/p>\n \u201cThe overall argument,\u201d Rodriguez says, \u201cis that if Lido has more than 33% market dominance, that hurts Ethereum\u2019s credible neutrality<\/a>. Lido essentially becomes a governance wrapper over Ethereum<\/a>, which specifically was never meant to have on-chain governance<\/a>.\u201d<\/p>\n \u201cIf Ethereum, as a community, decides that Lido is too powerful [and] decides to enshrine liquid staking into the protocol, or decides to straight-up fork Lido,\u201d he says, \u201cthat harms the property rights of developers and users of Ethereum.\u201d<\/p>\n Looking back at earlier days of liquid staking<\/a> on Ethereum, Rodriguez says, \u201cwe easily could be in a world today where centralized exchanges are the majority of the stakers of Ethereum.\u201d<\/p>\n The reason centralized exchanges are not the \u201cmonopoly powers\u201d over Ethereum, Rodriguez says, \u201cis specifically because of Lido.\u201d He adds that Lido is implementing a staking router<\/a> to help \u201cdiversify\u201d staking to smaller validators.<\/p>\n Rodriguez says Lido is implementing \u201cdual-governance\u201d in the future, whereby staked ETH holders will have \u201cveto rights\u201d in the event of any malicious act by Lido governance.\u00a0<\/p>\n Lido is demonstrating through these actions, he says, that it is trying to become \u201cincentive-aligned with Ethereum long-term.\u201d In fact, there\u2019s no other protocol other than Uniswap<\/a>, perhaps, that is more aligned with Ethereum, argues Rodriguez.<\/p>\n \u201cWe\u2019re going to ultimately have a winner-take-most or a winner-take-all scenario in an open source world,\u201d he says, \u201cwhere network and liquidity effects really drive brand and overall market dominance in the future.\u201d<\/p>\n \u201cThe cause for concern is over-blown,\u201d he says.<\/p>\n Self-limiting to a maximum market dominance of 22% \u201closes nuance,\u201d says Blockworks research analyst, Ryan West. Solving the problem requires addressing the \u201cmechanism design from a core protocols perspective,\u201d West says.\u00a0<\/p>\n \u201cIf the only solution you have to this is asking and begging the protocols themselves to self-limit,\u201d he says, \u201cit\u2019s a problem with the underlying design.\u201d<\/p>\n West explains that limiting staking dominance to 22% or less would theoretically make it difficult to take over the network as more than three entities would have to collude to exceed 66% of the entire stake. \u201cI believe that\u2019s the reasoning behind it,\u201d he says, \u201cbut at the same time, when you look at the design of these LST protocols, it\u2019s not like it\u2019s one entity staking this ETH<\/a>.\u201d<\/p>\n \u201cThere are decentralized solutions and Lido is obviously working towards those<\/a>,\u201d he says.\u00a0<\/p>\n \u201cYou should look less so at the number of ETH staked by these operators and instead look at the underlying design,\u201d West says. \u201cAs long as it\u2019s aligned with Ethereum, then I think that\u2019s good enough for me.\u201d<\/p>\n Get the day\u2019s top crypto news and insights delivered to your email every evening.\u00a0Subscribe to Blockworks\u2019 free newsletter<\/a>\u00a0now.<\/strong><\/p>\n Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can\u2019t-miss tweets and more from\u00a0Blockworks Research\u2019s Daily Debrief<\/a>.<\/strong><\/p>\n Can\u2019t wait? Get our news the fastest way possible.\u00a0Join us on Telegram<\/a>\u00a0and follow us on\u00a0Google News<\/a>.<\/strong><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":" In a spicy take on Lido\u2019s liquid staking dominance, David Rodriguez says Ethereum thought leaders aren\u2019t being realistic about the problem and are in fact, \u201ccoping.\u201d The Blockworks Research analyst doesn\u2019t hold back in his critique of some of the community\u2019s suggestions to address the situation.\u00a0 Rodriguez explains that some leaders are suggesting Lido should […]<\/p>\n","protected":false},"author":2,"featured_media":151277,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[230,225,221,227,226,228,229,60,223,224,222],"class_list":["post-151276","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptocurrency","tag-brave","tag-coinbase","tag-crypto","tag-decentralised","tag-decentralized","tag-decentralized-exchange","tag-erc-20","tag-featured","tag-meme-coin","tag-robinhood","tag-solana"],"_links":{"self":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/151276","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/comments?post=151276"}],"version-history":[{"count":2,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/151276\/revisions"}],"predecessor-version":[{"id":151281,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/151276\/revisions\/151281"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/media\/151277"}],"wp:attachment":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/media?parent=151276"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/categories?post=151276"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/tags?post=151276"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Cause for concern is over-blown<\/h2>\n
\n